It is reported that Chinese real estate developers have seized Melbourne 2 / 3 sales land, what secrets are hidden behind the Chinese enterprises to buy?
In Melbourne, Chinese property developers have bought more than 2/3 unsold plots for about A $2 billion over the past 18 months, opening up unlimited prospects for future local supply of new homes.
This surge in foreign investment has pushed land prices above A $1 million per hectare. With the start-up of planning and the completion of infrastructure, the standard cost per 400 square meters of land rose 30 percent in a year to reach a median price of A $323000.
Land sales to foreign buyers reached A $1.2 billion in 2017, accounting for 67 percent of total land sales of A $10 million or more, up from 15 percent in 2014, according to real estate group RPM.
After tracking acquisitions by overseas buyers, RPM found that the buying trend remained constant in the first five months of 2018.
Chinese buyer purchase record
Christian Ranieri, managing director of real estate deals at RPM, said that while demand for local buyers was also strong, large-scale deals had always been overseas buyers. Like some institutions or family-owned businesses with "substantial equity" and "oversized balance sheets".
In May, two Chinese property developers paid A $200m each for two plots of land in northern and southeastern Melbourne that could accommodate more than 7000 new homes with a total value of more than A $4 billion.
Last year, Chinese real estate giant Pik Gui Yuen (Country Garden) took over 363 hectares of land in the western part of Melbourne (now Windermere) for A $400m, and the project plans to provide 4500 homes to more than 12000 residents. This also set the purchase record of Chinese enterprises once again.
In December 2016, (Dahua) took three residential developments in western Melbourne for A $360 million.
In Melbourne, other Chinese companies with large amounts of land include Fucheng Group, New Sky Group and Highland Group (Growland).
Chinese buyers remain enthusiastic under multiple Policy constraints
Chinese investment in Australian real estate has halved to A $15.2 billion in a year, according to (FIRB), Australia's foreign investment review committee. In addition, the total value of home purchases approved by overseas buyers for fiscal year 2016 / 17 was A $25.2 billion, a marked decline from the previous value of A $72.4 billion. Over the same period, the total number of approved overseas home purchases dropped 67% to 13198 units.
Even so, Chinese buyers still have a crush on Australian property. According to statistics, Chinese buyers account for 25% of all commercial and housing properties sold to overseas buyers in Australia, ranking first.
China's total investment in Australia fell 50 percent in fiscal year-on-year 2016-17, but still topped with A $15 billion, followed by Canada (A $7.2 billion) and the United States (A $6.8 billion).
It is difficult for banks to collect money from local developers.
Another reason for Chinese developers to take the lead is that local developers are struggling to raise money.
Rory Costelloe, executive director of Villawood Properties, one of Melbourne's largest land developers, said that because of the current market, bank loans were limited to 50 percent of the purchase price and could not exceed A $35 million. As a result, most Australian local developers can not finance the purchase of new land.
"eight years ago, we paid A $20 million for 60 hectares of land in Mickleham, and now we are Trillium Estate.. The same location today will cost A $90 million. " He said。
Currently, Villawood is addressing the next round of funding challenges by forming a joint venture with local landowners.